State Farm is facing numerous lawsuits accusing the company of secretly working to reduce payouts for storm damage. Allegations include using internal definitions for hail damage not present in policies and restricting adjusters’ decision-making power. A former employee testified to internal pressure to deny claims, even when adjusters believed they should be paid. This has led to significant settlements for homeowners and increased scrutiny on State Farm’s claims-handling practices.
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Senate Bill 1120, the “Physicians Make Decisions Act,” prohibits California health insurers from denying claims based solely on AI algorithms. Driven by a high rate of claim denials (approximately 26% in California) and concerns about AI misuse, the law ensures human oversight in coverage decisions for medically necessary care. While not banning AI entirely, SB 1120 mandates that human judgment remains central, safeguarding patient access to quality care. The Department of Managed Health Care will enforce the law, auditing denial rates and imposing deadlines for authorizations, with potential fines for violations. This California law is garnering national attention, with other states and Congress considering similar legislation.
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John Q. Hosedrinker